BILL NUMBER: SB 2174	CHAPTERED  08/28/00

	CHAPTER   256
	FILED WITH SECRETARY OF STATE   AUGUST 28, 2000
	APPROVED BY GOVERNOR   AUGUST 25, 2000
	PASSED THE ASSEMBLY   AUGUST 10, 2000
	PASSED THE SENATE   MAY 24, 2000
	AMENDED IN SENATE   APRIL 26, 2000
	AMENDED IN SENATE   MARCH 30, 2000

INTRODUCED BY   Committee on Revenue and Taxation (Senators Chesbro
(Chair), Alpert, Burton, Johnston, McPherson, and Poochigian)

                        FEBRUARY 25, 2000

   An act to amend Sections 6066, 6366, 6366.1, 6452, 6479.31, and
6480.1 of the Revenue and Taxation Code, relating to taxation.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 2174, Committee on Revenue and Taxation.  Taxation:  State
Board of Equalization.
   The Sales and Use Tax Law provides an exemption for certain sales
or leases of aircraft, and provides certain rebuttable presumptions
in that connection.
   This bill would clarify the rebuttable presumptions applicable to
those sales or leases.
   This bill would also prescribe the method of authenticating
persons filing an application for a sales and use tax permit or
return, permit filing of permit applications by electronic media, and
delete certain requirements as to information on returns and
electronic filing declarations.
   Under existing law, distributors and brokers of motor vehicle fuel
are required to collect a prepayment of sales tax from the person to
whom the motor vehicle fuel is transferred, and when the motor
vehicle fuel is resold, the person is entitled to claim credit for
the prepayment paid to the supplier on the return for the period in
which the fuel is resold.
   This bill would exempt from those prepayment requirements any
motor vehicle fuel sold by a distributor or broker to a qualified
purchaser, as defined, who, pursuant to a contract with the State of
California or its instrumentalities, resells that fuel to the State
of California or its instrumentalities.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 6066 of the Revenue and Taxation Code is
amended to read:
   6066.  (a) Every person desiring to engage in or conduct business
as a seller within this state shall file with the board an
application for a permit for each place of business.  Every
application for a permit shall be made upon a form prescribed by the
board and shall set forth the name under which the applicant
transacts or intends to transact business, the location of his place
or places of business, and such other information as the board may
require.  An application for a permit shall be authenticated in a
form or pursuant to methods as may be prescribed by the board.
   (b) An application filed pursuant to this section may be filed
using electronic media as prescribed by the board.
   (c) Electronic media includes but is not limited to, computer
modem, magnetic media, optical disk, facsimile machine, or telephone.

  SEC. 2.  Section 6366 of the Revenue and Taxation Code is amended
to read:
   6366.  (a) There are exempted from the taxes imposed by this part
the gross receipts from the sale in this state of, and the storage,
use, or other consumption in this state of, the following:
   (1) Aircraft sold to any person using the aircraft as a common
carrier of persons or property under authority of the laws of this
state, of the United States, or of any foreign government, or sold to
any foreign government for use by that government outside of this
state, or sold to any person who is not a resident of this state and
who will not use that aircraft in this state otherwise than in the
removal of the aircraft from this state.
   (2) (A) A ground control station sold to any foreign government
for use by that government outside of this state or sold to any
person who is not a resident of this state and who will not use that
ground control station in this state otherwise than in the removal of
the ground control station from this state.
   (B) A "ground control station" means a portable facility used to
operate aircraft in the air without a pilot on board.  The term
includes controls, video equipment, computers, generators, and
communications equipment, sold as an integral part of the station,
and antennas used to control the aircraft.  The term does not include
trucks, tractor-trailers, or other devices solely used to transport
the station.
   (3) Tangible personal property that is purchased on or after
October 1, 1996, and becomes a component part of any aircraft
described in paragraph (1), as a result of the maintenance, repair,
overhaul, or improvement of that aircraft in compliance with Federal
Aviation Administration requirements, and any charges made for labor
and services rendered with respect to that maintenance, repair,
overhaul, or improvement.
   (b) With respect to aircraft sold on or after January 1, 1997, it
shall be presumed that a person is not engaged in business as a
common carrier if the person's yearly gross receipts from the use of
the aircraft as a common carrier do not exceed 20 percent of the
purchase cost of the aircraft to him or her, or fifty thousand
dollars ($50,000), whichever is less.  This presumption may be
rebutted by contrary evidence satisfactory to the board showing that
the person is engaged in business as a common carrier.
   In no event shall "gross receipts" include compensation by the
person or related parties for use of the aircraft as a common
carrier.
  SEC. 3.  Section 6366.1 of the Revenue and Taxation Code is amended
to read:
   6366.1.  (a) There are exempted from the taxes imposed by this
part, the gross receipts from the sale of and the storage, use, or
other consumption in this state of aircraft which are leased, or are
sold to persons for the purpose of leasing, to lessees using such
aircraft as common carriers of persons or property under authority of
the laws of this state, of the United States or any foreign
government, or to any foreign government as lessees for use by such
government outside the state, or to persons as lessees who are not
residents of this state and who will not use such aircraft in this
state otherwise than in the removal of such aircraft from this state.

   (b) There are exempted from the taxes imposed by this part, the
gross receipts from the sale of and the storage, use, or other
consumption in this state of tangible personal property sold to an
aircraft manufacturer and incorporated into aircraft to be leased by
the manufacturer under conditions set forth in subdivision (a) of
this section.
   (c) With respect to aircraft leased, or sold for the purpose of
leasing, on or after January 1, 1997, it shall be presumed that the
aircraft is not regularly used in the business of transporting for
hire property or persons if the lessor's yearly gross receipts from
the lease of that aircraft to persons using the aircraft as common
carriers of property or persons do not exceed 20 percent of the cost
of the aircraft to the lessor, or fifty thousand dollars ($50,000),
whichever is less.  This presumption may be rebutted by contrary
evidence satisfactory to the board showing that the aircraft is
regularly used as a common carrier of property or persons.
   In no event shall "gross receipts" include compensation by the
lessor or related parties for use of the aircraft as a common
carrier.
  SEC. 4.  Section 6452 of the Revenue and Taxation Code is amended
to read:
   6452.  (a) On or before the last day of the month following each
quarterly period of three months, a return for the preceding
quarterly period shall be filed with the board in the form as
prescribed by the board, which may include, but not be limited to,
electronic media.  Returns shall be authenticated in a form or
pursuant to methods as may be prescribed by the board.
   (b) For purposes of the sales tax, a return shall be filed by
every seller and also by every person who is liable for the sales tax
under this part.  For purposes of the use tax, a return shall be
filed by every retailer engaged in business in this state and by
every person purchasing tangible personal property, the storage, use,
or other consumption of which is subject to the use tax, who has not
paid the use tax due to a retailer required to collect the tax.
   (c) Any retailer or other person who fails or refuses to furnish
any return required to be made, or who fails or refuses to furnish a
supplemental return or other data required by the board, is guilty of
a misdemeanor punishable as provided in Section 7153.
  SEC. 5.  Section 6479.31 of the Revenue and Taxation Code is
amended to read:
   6479.31.  (a) Any return, declaration, statement, or other
document required to be made under this part that is filed using
electronic media shall be filed and authenticated pursuant to any
method or form the board may prescribe.
   (b) Notwithstanding any other law, any return, declaration,
statement, or other document otherwise required to be signed that is
filed by the taxpayer using electronic media in a form as required by
the board shall be deemed to be a signed, valid original document,
including upon reproduction to paper form by the board.
   (c) Electronic media includes, but is not limited to, computer
modem, magnetic media, optical disk, facsimile machine, or telephone.

  SEC. 6.  Section 6480.1 of the Revenue and Taxation Code is amended
to read:
   6480.1.  (a) After service of written notification by the board,
on any distribution in this state of motor vehicle fuel subject to
the motor vehicle fuel license tax, the distributor shall collect
prepayment of retail sales tax from the person to whom the motor
vehicle fuel is distributed.  The prepayment required to be collected
by the distributor constitutes a debt owed by the distributor to
this state until paid to the board, until satisfactory proof has been
submitted to prove that the retailer of the fuel has paid the retail
sales tax to the board, or until a distributor or broker who has
consumed the fuel has paid the use tax to the board.  Each
distributor shall report and pay the prepayment amounts to the board,
on a form prescribed by the board, in the period in which the fuel
is distributed.  On each subsequent distribution of that motor
vehicle fuel, each seller, other than the retailer, shall collect
from his or her purchaser a prepayment computed using the rate
applicable at the time of distribution.  Each distributor shall
provide his or her purchaser with a receipt or invoice for the
collection of the prepayment amounts which shall be separately stated
thereon.
   (b) After service of written notification by the board, the broker
shall collect prepayment of the retail sales tax from the person to
whom the motor vehicle fuel is transferred.  The prepayment required
to be collected by the broker constitutes a debt owed by the broker
to the state until paid to the board, or until satisfactory proof has
been submitted to prove that the retailer of the fuel has paid the
tax to the board.  Each broker shall provide his or her purchaser
with a receipt or invoice for the collection of the prepayment
amounts which shall be separately stated thereon.
   Each broker shall report and pay the prepayment amounts to the
board, on a form prescribed by the board, in the period in which the
fuel is distributed.  The amount of prepayment paid by the broker to
his or her vendor shall constitute a credit against the amount of
prepayment required to be collected and remitted by the broker to the
board.
   (c) A distributor or broker who pays the prepayment and issues a
resale certificate to the seller, but subsequently consumes the fuel,
shall be entitled to a credit against his or her sales and use taxes
due and payable for the period in which the prepayment was made,
provided that he or she reports and pays the use tax to the board on
the consumption of that fuel.
   (d) The amount of a prepayment paid by the retailer or a
distributor or broker who has consumed the fuel to the seller from
whom he or she acquired the fuel shall constitute a credit against
his or her sales and use taxes due and payable for the period in
which the distribution was made.  Failure of the distributor or
broker to report prepayments or the distributor's or broker's failure
to comply with any other duty under this article shall not
constitute grounds for denial of the credit to the retailer,
distributor, or broker, either on a temporary or permanent basis or
otherwise.  The retailer, distributor, or broker shall be entitled to
the credit to the extent of the amount prepaid to his or her
supplier as evidenced by purchase documents, invoices, or receipts
stating separately the amount of tax prepayment.
   (e) The rate of the prepayment required to be collected during the
period from July 1, 1986, through March 31, 1987, shall be four
cents ($0.04) per gallon of motor vehicle fuel distributed or
transferred.
   (f) On April 1 of each succeeding year, the rate per gallon,
rounded to the nearest one-half of one cent, of the required
prepayment shall be established by the board based upon 80 percent of
the combined state and local sales tax rate established by Sections
6051, 6051.2, 6051.3, and 7202, and Section 35 of Article XIII of the
California Constitution on the arithmetic average selling price
(excluding sales tax) as determined by the State Energy Resources
Conservation and Development Commission, in its latest publication of
the "Quarterly Oil Report," of all grades of gasoline sold through a
self-service gasoline station.  In the event the "Quarterly Oil
Report" is delayed or discontinued, the board may base its
determination on other sources of the arithmetic average selling
price of gasoline.  The board shall make its determination of the
rate no later than November 1 of the year prior to the effective date
of the new rate.  Immediately upon making its determination and
setting of the rate, the board shall each year, no later than January
1, notify by mail every distributor, broker, and retailer of motor
vehicle fuel.  In the event the price of fuel decreases or increases,
and the established rate results in prepayments which consistently
exceed or are significantly lower than the retailers' sales tax
liability, the board may readjust the rate.
   (g) (1) Notwithstanding any other provision of this section, motor
vehicle fuel sold by a distributor or broker to a qualified
purchaser who, pursuant to a contract with the State of California or
its instrumentalities, resells that fuel to the State of California
or its instrumentalities shall be exempt from the prepayment
requirements.
   (2) A qualified purchaser who acquires motor vehicle fuel for
subsequent resale to the State of California or its instrumentalities
pursuant to this subdivision shall furnish to the distributor or
broker from whom the fuel is acquired an exemption certificate,
completed in accordance with any instructions or regulations as the
board may prescribe.  The distributor or broker shall retain the
certificate in his or her records in support of the exemption.  To
qualify for the prepayment exemption, both of the following
conditions shall apply:
   (A) The qualified purchaser does not take possession of the fuel
at any time.
   (B) The fuel is delivered into storage tanks owned or leased by
the State of California or its instrumentalities via facilities of
the distributor or broker, or by common or contract carriers under
contract with the distributor or broker.
   (3) For purposes of this subdivision, "qualified purchaser" means
a broker as defined in Section 7308 who does not have or maintain a
storage facility or facilities for the purpose of selling motor
vehicle fuel.
